What is a Floating Holiday policy?

A floating holiday policy elucidates the rules of availing floating holidays in your company, along with the list of preassigned floating holidays. It would talk about holiday notice, approval notice, the number of floating holidays available, and so on. It is provided along with the PTO policy and employees can access them from time off tracking software for reference.

Six things to keep in mind while writing a floating holiday policy

It is best to have a floating holiday policy that employees can access when in doubt. But before you create a floating holiday policy, here are some things to consider: 

Sample floating holiday policy - Free Template 

All exempt employees receive two floating holidays each year along with the [Company Name]’s paid time off. These floating holidays are to be used for religious, cultural, federal, state, or personal holidays (work anniversary, employee birthday, etc.) during which the company remains open. 

Current employees and new employees joining [Company Name] mid-year can avail the floating holidays from 1st January. New employees hired before 1st July would receive two floating holidays upon hire, while those hired after 1st July would receive one floating holiday. 

Employees must specify the event for which the floating holiday would be used and apply at least 5 days before the said event. The employee can apply for the leave using the time off management system, which will be sent to their reporting manager for approval. 

Floating holidays will not be carried over to the next calendar year nor encashed upon termination.

FAQs on floating holiday policy

What are some floating holidays listed in the policy?

Some examples of floating holidays include:

  • Christmas eve
  • New Year’s eve
  • Hanukkah
  • Eid
  • Diwali
  • Rosh Hashanah
  • Martin Luther King Jr. Day

What are the points to keep in mind while drafting floating holiday policy?


  • Mass absenteeism: It happens when all your employees decide to use the same floating holiday. Given that companies are working during floating holidays, it would mean there’s nobody taking care of the frontline work. 
  • Loss of money: If you allow encashment of floating holidays, you may pay for the unused floating holidays when an employee leaves the company. This is in addition to the paid time off that the employee can encash. 
  • Unnecessary paperwork: You will have to invest time and money in creating a floating holiday policy and more paperwork concerning leave encashment and leave carryover.

What is the difference between floating holidays and PTO?

Implementation of floating holidays has a lot of flexibility since there are no federal laws to oversee them. The implementation can vary based on the office location, the diversity ratio, and the PTO policy. Some of the common differences include:

  • Floating holidays are fixed and cannot be earned, whereas PTOs can be incentivized.
  • Floating holidays cannot be carried over to the next year.
  • Floating holidays are offered in lumpsum at the beginning of the year, whereas PTOs can be accrued through the year.